Question

Select the correct answer. Why is investing important in an economy?

A. prevents people from spending money on things they can’t afford
B. provides money for machinery, tools, and equipment for growth
C. offers interest rates that don’t change
D. carries no risk of loss
E. ties to the discount rate

Answer 1

The correct answer would be option B, provides money for machinery, tools and equipment for growth.

Step-by-step explanation:

From investing in an economy, it means to put money in the circulation. This money would be used in the economy to foster growth. The person or company who invest in the economy would invest with the hope of getting profit, while the company or institution where the money is invested would use this money in buying equipment, machinery or tools that would increase the efficiency and effectiveness of the organization or the institution, that in turns will contribute towards the increased efficiency and growth of the economy. In this way, the invested company will get the benefit and also the investor would be benefited by this investment.

Answer 2

B. provides money for machinery, tools, and equipment for growth

Investment, particularly capital investment improves productivity in labor by increasing tools and equipment that helps workers. For example, a carpenter works more efficiently when he uses a chainsaw instead of an ax. Improved efficiency of workers leads to economic growth.